FINC 305 – Fundamentals of Finance (3)
The primary goal of financial management is to maximize the wealth of the company’s shareholders (owners) by causing the value of their company stock to increase. As a result, the ability to determine the market value of an asset or liability is an important element of finance. Valuation is the process of estimating what something is worth. Valuation is of critical importance when faced with investment and financing decisions.
Businesses must decide, for example, whether to invest in new technology or a new factory and how to raise money to pay for such investments (e.g., borrow money or sell company stock). Like businesses, individuals are faced with investment and financing decisions. For example, have you decided how much you need to save for retirement? Having a firm grasp of the fundamentals of finance will help businesses and individuals make these important decisions.
COMPETENCY OBJECTIVES
Upon successful mastery of this competency, you will be able to:
- Demonstrate an understanding of financial systems and the goals of the firm.
- Demonstrate an understanding of how to value bonds and stock
- Demonstrate an understanding of the relationship between risk and return.
- Demonstrate an understanding of the cost of financing, capital structure and dividends.
- Demonstrate an understanding of how to make decisions to invest in long-term assets (Capital Budgeting Decisions)
- Demonstrate an understanding of how to manage working capital.